This is a very common question that is asked of us in our presentations. Often, the
interaction goes like this.
Client: “why haven’t I heard of this before?”
Our team: “when was the last time you went to coffee with a
Our team: “how many billionaires does your CPA work with?”
Client: nods affirmatively with a nice grin:-). They get it that
there’s a lot that goes on amongst the wealthy that they
do not know about or understand.
That’s the simple way to answer, making it a little fun. But it gets the point across: lots
of transactions happen by the wealthy, using different tax strategies, that most of us
have no clue about. When OfficeMax used the TDCO strategy with approximately
$1.47B of a sale they consummated, we can assume that they had really smart tax
professionals to advise them on a level that we don’t deal with or know anything about.
Now, let’s take a little bit of a deeper dive at the question and what could be behind it.
Genuinely inquisitive. There is a lot of information out there. The internet has made
everything fairly easily accessible. However, the more we know, the more we realize
that we don’t know!
Many clients will ask the question simply because they haven’t heard of it and don’t
know why they haven’t. They do not yet know where they can find this kind of
information and want to learn more so that they can make the best decision for
It’s just as simple as that!
Concern and/or Fear. It is very reasonable to be very cautious when one has not
heard of something before. There have been lots of scams that have been financially
costly to good hearted people as well as lots of prison time to the scammers who were
actually caught. Clients should not jump into a tax process without proper
investigation. When there is a lack of exposure and knowledge, one ought to have
some level of concern. However, that concern will hopefully not paralyze them. It
should drive them to investigate!
That is why it is important for a prospective client to consult with their own tax
professionals. Those are the client’s true advisors. They are there to provide the proper
tax advice that the client needs.
That said, please understand that tax professionals don’t know all of the tax codes and
the strategies employed using them. For some, that’s a shocking or surprising
statement! Tax professionals don’t know everything there is about the tax code? They
do not. It’s a beast to try to know everything. The question is, are the tax professionals
willing to do the work for their client to investigate what they don’t know or are they
going to simply advise the client to not do something because they have never heard
of it? That’s the difference, sometimes, between a tax professional that wants to learn
the most for their client or one that wants to operate in their own comfort zone thereby
limiting the value to their client.
Pride. Too often, prospective clients think too much of themselves. Actually, all of us
do in one form or another! However, in this case, people often think that they know
everything that is worth knowing on a particular subject (like real estate tax strategies)
and that if they haven’t already heard of it, it must not be good or could be a scam.
Again, all of us have a certain level of pride, so in cases like these, grace still needs to
be offered when answering the question. Otherwise, my competitive side might come
out and I could ask them, “so, tell me what you know about the tax benefits of
Zuckerberg Trusts, Dynasty Trusts, Dynasty LLCs, Delaware Statutory Trusts, CRT’s,
CRUT’s, CLT’s, CRAT’s, Malta Trusts, and so on in order to show them that they don’t
know nearly as much as they think they do.
I could be very easily stumped as well and I’m a capital gains tax strategist! There is a
lot out there.
However, the positive side of those that have the pride issue is that they often step up
and investigate what they don’t know because they can’t stand to learn that there is
something out there that others know and they don’t!
Wrap up. Regardless of whatever the heart issue is behind asking the above question,
it is a very fair question to ask! It should be answered in a manner that satisfies the
client and helps them to decide if it is in their best interest to employ the strategy.
That’s why we try to provide as much information as we can and have tax professionals
available if needed. In each case, we have tax professionals that represent the
prospective clients and not the asset dealers. The client must always seek their own
Disclosure: While this is general information about capital gains tax strategies, it does not constitute legal or tax advice. The best way to get guidance on your specific legal issue is to contact a lawyer.